The problem with a standard video element is that while it's mostly nice for the user, it tends to be pretty bad for the server operator. There's a ton of problems with browser video, beginning pretty much entirely with "what's the codec you're using". It sounds easy, but the unfortunate reality is that there's a billion different video codecs (and a heavy use of Hyrum's law/spec abuse on the codecs) and a browser only supports a tiny subset of them. Hosting video already at a basis requires transcoding the video to a different storage format; unlike a normal video file you can't just feed it to VLC and get playback, you're dealing with the terrible browser ecosystem.
Then once you've found a codec, the other problem immediately rears its head: video compression is pretty bad if you want to use a widely supported codec, even if for no other reason than the fact that people use non-mainstream browsers that can be years out of date. So you are now dealing with massive amounts of storage space and bandwidth that are effectively being eaten up by duplicated files, and that isn't cheap either. To give an estimate, under most VPS providers that aren't hyperscalers, a plain text document can be served to a couple million users without having to think about your bandwidth fees. Images are bigger, but not by enough to worry about it. 20 minutes of 1080p video is about 500mb under a well made codec that doesn't mangle the video beyond belief. That video is going to reach at most 40000 people before you burn through 20 terabytes of bandwidth (the Hetzner default amount) and in reality, probably less because some people might rewatch the thing. Hosting video is the point where your bandwidth bill will overtake your storage bill.
And that's before we get into other expected niceties like scrolling through a video while it's playing. Modern video players (the "JS nonsense" ones) can both buffer a video and jump to any point in the video, even if it's outside the buffer. That's not a guarantee with the HTML video element; your browser is probably just going to keep quietly downloading the file while you're watching it (eating into server operator cost) and scrolling ahead in the video will just freeze the output until it's done downloading up until that point.
It's easy to claim hosting video is simple, when in practice it's probably the single worst thing on the internet (well that and running your own mailserver, but that's not only because of technical difficulties). Part of YouTube being bad is just hyper capitalism, sure, but the more complicated techniques like HLS/DASH pretty much entirely exist because hosting video is so expensive and "preventing your bandwidth bill from exploding" is really important. That's also why there's no real competition to YouTube; the metrics of hosting video only make sense if you have a Google amount of money and datacenters to throw at the problem, or don't care about your finances in the first place.